Template-type: ReDif-Paper 1.0
Author-Name: Berg Anita van den
Author-Name: Bos Iwan 
Author-workplace-name: METEOR
Title: Collusion in a Price-Quantity Oligopoly
Abstract: In the context of an infinitely repeated oligopoly game, we study (optimal) collusion among firmsthat have both price and quantity as a strategic choice variable. We consider two modes ofproduction: production in advance and production to order. For both types of industry, we comparea price cartel with a price-quota cartel and analyze if and under what conditions firms prefer thelatter to the former. We find three main results. First, when production is in advance of salesand market demand is relatively elastic, an additional agreement on outputs may be required tosolve coordination and incentive problems. Second, if production is in advance of sales and marketdemand is relatively inelastic, then a price-quota cartel is always more profitable than a pricecartel. Finally, with production to order, collusion may not be sustainable without a quota agreement.
Keywords: Industrial Organization; 
Series: Research Memoranda
Creation-Date: 2011
Number: 039
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:46f7a26b-14d7-453c-a7ac-702aa028fbcd/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 628710
Handle: RePEc:unm:umamet:2011039